Quote from Sen. Sheldon Whitehouse.
…wait for it…wait for it….BOOM! There it is!
Headline – “Conservative Republicans say COVID spending must consider growing debt.“
The GOP who gave us a ruinous 2017 tax plan now senses that they’ve wrung as much money for their wealthy donors as they can from the previous “stimulus” bills and it’s time to invoke the the specter of “runaway deficit spending” again. Sen. McConnell casually threatened states and cities with bankruptcy instead of the aid they desperately need, and his compatriots are foreshadowing their plans to destroy safety nets for regular people, like Social Security, Medicare, and Medicaid, to pay for their COVID-19 giveaways to corporations and the rich. Just in time to thwart another stimulus bill aimed at helping us non-millionaires, our election system and the USPS weather this pandemic.
But we know where to find some money…We need to take it back.
Action #1: STOP the GOP’s $170 billion hand-out to the wealthy.
In our 3/31 post, we asked legislators to take back one of the most corrupt aspects of the CARES Act, a $170 billion tax break giveaway for millionaires. Over 80% of this multi-year benefit would go to 43,000 wealthy hedge fund managers and real estate speculators, gifting each of them an average of $1.6 million for 2020 alone. (Details of this boondoggle here.) Senator Sheldon Whitehouse (D-RI) and Congressman Lloyd Doggett (D-TX) are now trying to get this handout rescinded, along with 178 groups, including Indivisible.
“For those earning $1 million annually, a tax break buried in the recent coronavirus relief legislation is so generous that its total cost is more than total new funding for all hospitals in America and more than the total provided to all state and local governments,” said Rep. Lloyd Doggett.
This bad idea was NEVER about the pandemic: It began life as part of the GOP’s 2017 Tax Scam to enrich those like our president and Jared Kushner. It was reluctantly jettisoned to keep the plan’s official “score” within the range necessary to use a 50-vote process in the Senate, bypassing Democratic opposition. It quietly reappeared in two sections of the 880-page CARES Act, (See pgs. 50-60), allowing corporations and the wealthy to take tax breaks going back to Dec. 2017, just as if it had been in the GOP’s 2017 Tax Act to start with. This corrupt work-around, like its original incarnation, has nothing to do with the pandemic and is devoid of any requirements for employers to pay employees or to provide sick leave, or even to have ever had employees at all.
Minimal script: I’m calling from [zip code] to ask Rep./Sen. [___] to cosponsor Rep. Lloyd Dogget and Sen. Sheldon Whitehouse bills to repealthe CARES Act $170 billion dollar tax giveaway to our nation’s 1%.
More script if you want it: That money should be reeled back in to provide additional financial support for the poor and middle class, our states and cities, equipment for first responders or payments for medical treatment for un-or-underinsured coronavirus patients.
Action #2: Stop the piracy at the SBA. Expand the “small” business loan” audits.
(We will address the GOP’s woeful underfunding of small businesses in a later post. Below are some interesting statistics from the Small Business Association.)
With only $349 billion to start, an ill-defined “certification of need,” banks financially motivated to help their biggest customers, and sabotaged oversight, the SBA’s Paycheck Protection Program (PPP) taxpayer-backed low-interest and forgivable loans were swamped by companies with thousands of employees, companies with fines and penalties from the government or at risk of financial failure prior to the pandemic, companies with no marketable product to sell, and those whose parent company is located in a foreign country. Even the Los Angeles Lakers took a jump-shot for $4.6 million.
And Treasury Secretary Steven Mnuchin is going to let a bunch of these pirates get away with it by declaring he’s only going to audit borrowers of over $2 million – just 1.5% of the loans that took over 27% of the available funding. This leaves the vast middle, $350k – <$2 million (11% of the loans, 40% of the funding) unexamined. That’s a nice payday for a few minutes spent on a computer with a friendly banker.
Although the administration has belatedly issued a few more rules and has warned the obvious violators to return their loans by May 7th, much of our money will be going to the wrong people while real small businesses go under.
Minimal script: I’m calling from [zip code] and I want Rep./Sen. [___] to require that EVERY company who takes an SBA PPP loan under the CARES Act over $150k be audited for compliance to the certification of need, to make this information available to the public and to impose criminal fines on those who’ve taken money under false pretenses after May 7th.
Action #3: “Lining up at the trough.” The GOP’s scamming the $500 billion corporate loan program.
What we were told: The CARES Act designated $500 billion in loans to large companies affected by the pandemic. The Democrats created a list of basic rules that firms would have to follow to get the money: “no stock buybacks and dividends, no firing more than 10% of the March 24, 2020 work force and loans less than 5 years at a risk-commensurate interest rate. The Act also goes on to say that senior management compensation at a bailed out firm has to be capped at $3 million plus 50% of the excess of their 2019 pay over $3 million.”
They should have asked for more: Unlike the U.K.’s bailout package, which required that a firm show that it was financially sound before the crisis to qualify for a bailout, the CARES Act still allows us to throw good taxpayer money after bad. Our money is going to American Airlines, which has a negative book of equity, for example. Boeing is another bad actor – having received $74 billion of federal subsidies since 2011 and returning only $3 billion in federal and state taxes from 2017-2019, along with two crashes that killed hundreds. (Update 4/30: Boeing turns down federal bailout funds) CEO pay should have been capped based on a worker compensation ratio – we suggest 1989’s maximum 58-to-1 average employee compensation (it’s now 278-1) with a 3-year freeze on stock awards and options. Instead, Delta’s CEO, who was paid roughly $15 million pre-pandemic, for example, could legally receive up to $9 million of our money in 2020, approximately $4,500/hour or $1,125 for each 15-minute bathroom break.
What’s really going to happen, thanks to the GOP: Note that the restrictions from Congress on using the money are specifically tied to loans, not bond buys. Through the Primary Market Corporate Credit Facility, the Fed was going to provide the funding by buying bonds. The corporations would be required to pay the Fed back with interest. “But on April 9, the Fed altered the design of the program to exclude direct corporate lending. The Fed program will still essentially lend money to large companies—by buying their bonds—but the Fed will not be compelled by the Cares Act to ensure that companies abide by the divided and CEO pay rules.”
So, the GOP does business as usual. Your tax money will go to corporations who can fire their workers at will, to multibillion dollar CEO compensation packages and to the same stock buyback and dividend schemes that made them so financially fragile, they couldn’t ride out the pandemic’s losses.
Minimal script: I’m calling from [zip code] and I want Rep/Sen. [___] to rescind the CARES Act $500 billion corporate bailout until ALL funding, whether it be loans or bonds, includes the basic restrictions of the original lending program.
More script if you want it: A 3 million dollar cap for CEOs plus 50% of their previous exhorbitant salaries? Why are we rewarding the CEOs whose bad fiscal behavior made their companies so fragile in the first place? CEO funding should be tied to a reasonal ratio to typical employee compensation, capped at $500,000 total, and be forbidden from taking stock awards and options for 3 years.
Send a copy of your message or call the Fed’s Board of Governors too.
T: 202-452-3000 or email
Rep. Julia Brownley: email, (CA-26): DC (202) 225-5811, Oxnard (805) 379-1779, T.O. (805) 379-1779
or Rep. Salud Carbajal: email.(CA-24): DC (202) 225-3601, SB (805) 730-1710 SLO (805) 546-8348
Senator Feinstein: email, DC (202) 224-3841, LA (310) 914-7300, SF (415) 393-0707, SD (619) 231-9712, Fresno (559) 485-7430
and Senator Harris: email, DC (202) 224-3553, LA (213) 894-5000, SAC (916) 448-2787, Fresno (559) 497-5109, SF (415) 355-9041, SD (619) 239-3884
Who is my representative/senator?: https://whoismyrepresentative.com